Two Affected Parties - ISDA Provision: Difference between revisions

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Two Affected Parties - ISDA Provision (view source)

Revision as of 12:43, 6 August 2018

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{{fullanat2|isda|6(b)(iii)|2002|6(b)(iii)|1992}}
{{isdaanat|6(b)(iii)}}
Exercise Caution here: Under the {{1992ma}} version, if your {{isdaprov|Failure To Pay}} also amounts to an {{isdaprov|Illegality}} it is deemed to be an Illegality, and if there are two {{isdaprov|Affected Parties}} there is a signficant delay in your ability to close out. A bit of a {{t|trick for young players}}.
Be careful here: Under the {{1992ma}}, if your {{isdaprov|Failure To Pay}} is also an {{isdaprov|Illegality}} it is treated as an {{isdaprov|Illegality}}: if there are two {{isdaprov|Affected Parties}} you will face a significant delay when closing out. A bit of a {{t|trick for young players}}.


===Differences between {{1992ma}} and {{2002ma}}===
===Differences between {{1992ma}} and {{2002ma}}===
Note also that reference to Illegality has been excised from the {{2002ma}} version.
Note also that reference to {{isdaprov|Illegality}} has been excised from the {{2002ma}} version.


Per Mr Firth’s bible, it was changed because it was found to be difficult in practice to implement a transfer or amendment after an {{isdaprov|Illegality}}.  Also, it could be that people realised that if an {{isdaprov|Illegality}} occurred you don’t want to have to wait 30 days to terminate, especially since you cannot rely on {{isdaprov|2(a)(iii)}} to withhold payments in the mean time.
They changed this because in practice, it turned out to too be hard to implement a transfer or amendment after an {{isdaprov|Illegality}}.  Folks realised that if an {{isdaprov|Illegality}} happens you don’t want to have to wait 30 days to terminate, especially if you can’t rely on {{isdaprov|2(a)(iii)}} to withhold payments in the meantime.
 
This was raised at a recent last {{ISDA}} meeting: {{A&O}} pointed out that there was a template amendment agreement to change the {{1992ma}} {{isdaprov|Illegality}} definition into the {{2002ma}} (if you don’t want to use the 2002 to start with).
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